TFM Sunrise Update 07-11-2022

Provided by Stewart-Peterson Inc.



Corn futures were up overnight with double digit gains posted across the board on weather concerns.  The U.S. Midwest and EU 2-week weather forecast is mostly warm and dry.  September corn gapped higher, gaining as much as 23-3/4 cents to 6.67 before trimming gains.  Dec hit an overnight high of 6.58-1/2 while rallying 25 cents.  Farmer selling has slowed due to uncertain weather, and production in the U.S. and EU could could drop 12 to 16 mmt ( 470-625 mil bu).  There is also concern about drop in Argentina and Ukraine corn exports that could shift demand to US.  Weekly Export Inspections will be out later this morning.  Trade estimates for tomorrow’s monthly USDA Supply/Demand report is for US 2022/23 carryout to near 1.442 bil bu vs USDA 1.400.  Some estimates are as high as 1.600 due to higher crops. This afternoon’s Weekly Crop Ratings are expected to be up 1% to 2% from last week on recent scattered rains.  U.S. stocks and crude oil are flat/weaker.  The dollar is higher.


Soybean futures rallied to 15.52-3/4 (Aug) and 14.38-1/2 (Nov) overnight on gains of 39-1/2 cents and 42 cents, respectively after gapping higher to start the night trade.  Prices then eased, but remain 20+ cents higher this morning.  August soybean meal is up 6.40 per ton to 437.70.   August Soy oil is up 1.07 to 63.66.  Given lower USDA acres, U.S. 2022/23 soybean carryout could drop closer to 200 mil bu.  The average trade guess for this week’s USDA report is 211 vs USDA 280.  Uncertain weather could send November beans closer to 15.00.  Meanwhile, China is in a new Covid lockdown.  One trade group sees soybeans, corn and wheat futures testing the highs from mid-May highs on Q3 tightening of World supplies versus demand.  Chinese Ag futures show Sept beans down 21 yuan; Soymeal up 38; Soy oil up 24; Palm oil down 36; Corn up 21.  Malaysian markets are closed for holiday.

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Wheat futures gapped higher, above and beyond their respective 200-day moving averages to start the week.  Sept Chicago wheat posted an overnight high of 9.40-1/4 and is up 16 cents this morning to 9.07-1/2.  Sept KC wheat is up 18-1/2 to 9.64-1/4 versus the overnight high of 9.98-1/4.   Sept MPLS wheat advanced as much as 52-3/4 cents to 10.44-1/2, and is up 23 to 10.14-3/4 this morning.  The underlying push to this technical recovery stems from EU weather worries where a further drop in the EU crop could push World wheat prices higher.  Importer demand also increased at last week’s lows near 8.32 in the KC wheat.  Argentina weather is lowering their crop and inflation and uncertain government policy could lower Argentina exports.


Cattle futures are called steady to lower.  Overall, the cattle market is continuing to consolidate, looking for a reason to move, but overhead resistance keeps prices in check, and value in the cash market provides support.  The October contracts have traded both sides of 139.00 for past 5 sessions amid concerns regarding consumer demand and the U.S. economy.   Estimated slaughter for Friday was 125,000 head, up 4,000 from last week and year.  Those supplies, especially in southern cattle keep a lid in the cash market.  The Choice cutout increased $4.07 last week and Select was quoted $2.01 higher.  Strong holiday business coupled with the shortened kill week, created limited offerings for fill-in business and short-term needs.  The follow through strength in grain markets on Friday pressured feeder cattle prices and looks to be the same today. The Feeder Cash Index was 2.18 softer to 162.90 and could be a limiting factor to the Aug feeder contract.  For the week, the cash feeder index traded 2.77 lower. 


Hogs are called steady to higher.  Oct and Dec hogs are poised for a potential strong move higher, but will need to see follow through of Friday’s trade.  The Front month contract stay tied to the cash index, with the expiration of the July contract on July 15.   Weekly export sales were strong for the week with new net sales of 31,200 MT for 2022 were down 3% from the previous week, but up 23% from the prior 4-week average.  Mexico, China and Japan were the top buyers of U.S. pork last week.  Pork carcass values closed higher on Friday, gaining 2.34 to 114.53, on a load count that was moderate at 304 loads.  The firmer carcass values during the week will support prices on Monday’s open.  Cash markets were softer on morning direct trade on Friday.  The weighted average price move lost .73 to 118.58 in the morning.  The 5-day rolling average is currently 119.18.  The Lean Hog Index was 0.23 higher to 110.16.  For the week, the Lean Hog Index traded .68 lower as the cash market may be finding a top.  The premium of the Jult futures to the index is a limiting factor with the Jul expiration looming on the 15th.  The hog market is at a point to break out higher or correct back to the bottom of the range.  The deferred contracts may be ready to surge higher this week on a possible break out over resistance.


Matt Strelow

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